An Industry-Wide Programfor Marketing

Canadian Seafood Products

Carey BonnellChair

SVCRT Marketing Alliance Working GroupOctober, 2013

MandateTo develop a proposal for creation of a

national seafood marketing alliance for the SVCRT’s consideration.

The proposal will include: Proposed mandate Governance/structure Funding model options Value proposition to industry Challenges/impediments to overcome Other items as required

Will Joint Marketing Work? It depends …

Can industry focus on commonalities of interest, rather than differences, and speak with unity of purpose?

Can a program be designed and implemented that industry will support? Does the industry see enough potential benefits to support program design

and development and give it enough time to show benefits?

Sackton: Why Seafood Branding Matters “Consumer perceptions of seafood – both positive and negative –

depend heavily on the origin of the product” “In short, there is a premium that buyers pay for a consistent

quality seafood brand” “Few corporate brands have achieved the power of the geographic

brands” “This is because the particular fish stocks, management, and

harvesting and processing all depend on a geographic area”

BenchmarksSuccessful programs in Alaska, Norway

Can we duplicate in Canada?Agricultural models in Canada

Beef is most advanced

Alaska Seafood Marketing Institute (ASMI)Mandate Increasing positive

awareness Collaborative marketing

programs Championing the

sustainability of Alaska seafood

Proactive marketing planning Quality assurance, technical

industry analysis, education, advocacy and research

Prudent, efficient fiscal management

StructurePublic-private partnership

between the State of Alaska and the Alaska seafood industry

7 member board appointed by governor

Levy of $0.5% based on landed value of fish purchases Industry increased from 0.3 to .5

in 2004 $25 million budget in 2013

secured through industry, federal and state funds

ASMI (Financial Information)

Norwegian Seafood Council (NSC)MandateJoint marketingMarket informationCommunication and

reputational risk management

NSC leads 500 marketing projects per year in 25 different countries all aimed at increasing demand for Norway Seafood

Marketing is founded on its competencies within consumer analyses, international marketing, brand establishment, new media and PR

StructurePublic company owned by

gov.Two year board

appointments with 6 directors

5 advisory marketing groups Norwegian Salmon and

Norwegian Fjord Trout Ground fish (Cod, Saithe,

Haddock etc.) Prawns and shellfish Conventional products (Salted

fish, Clip fish and Stock fish) Pelagic products (Herring,

Mackerel and Capelin)

NSC Value Formed in 1991 to rationalize highly subsidized industry Financed by industry through fees levied on all exports of

Norwegian seafood 0.75% on all types of fish and 0.20% on processed products

Sector investments include: Salmon / Trout – 58% Pelagic – 18% Whitefish – 11% Clip fish, salt fish, stock fish – 11% Prawns / Shellfish – 2%

NSC had a total budget of NOK 414 million (approximately $72 million CAN) in 2012 to invest in its strategic areas

Export value increased from $15 billion NOK in 1991 to $53 billion ($9.2 billion CAN) in 2011 Key improvements in strategic markets i.e. Singapore & Spain

ASMI & NSC SummaryGeneral feeling that ASMI & NSC are providing value

for moneyLevy based system funded largely by industry

ASMI - $0.5% - $25 million budget NSC - $0.75% ($0.25% processed) - $72 million budget

Public funds leveraged by industry levyNeither body received initial support from industry

but are now highly valuedModels focused around branding, promotion,

intelligence, awareness and communication (no direct sales!!)

Both jurisdictions have strong brand recognition

CanadaFed/prov investment of $5-$5.5 million annually

Add industry equity in range of 25% Initiatives are generally sector specific i.e. shell

on shrimp, Atlantic lobster, etc.Not always coordinated

General sense that Canadian focus is on selling vs. marketingThere are exceptions

No one body structured to take on role similar to ASMI or NSC

Sector bodies are generally underfunded to lead thisPublic funding limited compared to other sectors (i.e.

agri-food) and other jurisdictions (US, Norway, etc.)

Jurisdiction Comparisons (2010 data)Jurisdiction

Landings (mt)*

Export Value ($)**

Estimated Marketing $’s

Canada 1,088,546 $3.9 billion $7-8 million (TBC)

Norway 3,683,302 $9.4 billion $72 million

Alaska 1,971,990 $2.5 billion $25 million

• *Landings based on 2010 FAO statistics for CAN & NOR & NOAA statistics for Alaska

• ** Export data based on 2010 statistics

• In terms of trends• NOR seafood exports grown from about $2.5 billion in 1991

to $9.4 billion in 2010• Alaska seafood exports grown from $1.2 billion in 1998 to

$3.1 billion in 2011• Canadian seafood export value has not increased

substantially over the past 10 years

Seafood Export Trends ($)

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

0

1,000,000,000

2,000,000,000

3,000,000,000

4,000,000,000

5,000,000,000

6,000,000,000

7,000,000,000

8,000,000,000

9,000,000,000

10,000,000,000

CanadaNorwayAlaska

Seafood Landings Trends (MT)2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

NorwayCanadaAlaska

Cranfield re Canadian Beef LevyCanadian cattle producers gain net economic

benefits from investment in marketing and research activities.

… between 2005 and 2008 the BCR associated with the investment of producer check‐off dollars in marketing and research activities grew from 7:1 to 11:1, with an average BCR of 9:1 over this time period.

This means that on average from 2005 to 2008, every check‐off dollar invested in marketing and research activities earned $9 for Canadian cattle producers.

MAWG: Key QuestionsAre there sufficient commonalities of interest to

justify an industry-wide initiative?What does the industry need to achieve that can best

be done through a joint initiative?How can an industry-wide initiative create value for

individual participants?What value proposition will attract industry support?How can a joint marketing initiative be designed,

organized, and implemented?How should a levy on industry to fund the effort be

calculated and collected?

CommonalitiesBoth the capture fishery and aquaculture are

underperforming relative to their potentialSeafood exports have not increased over past

10 yearsSubstantial change is needed for both

industries to achieve their potentialGislason: “Canada will never be a low-cost

producer of seafood on the world stage … Our potential advantage lies in high quality, high value niche seafood products

Opportunities and needs differ by sector but there are areas of overlap

CommonalitiesOpportunities

Global demand for seafood is growing; Canadian production is not We are a small player in the global seafood market; we need to

identify market niches in which we have advantages The pending free-trade agreement with EU should open up new

opportunities Developing countries are seeing significant growth in their middle

classes, willing and able to pay more for higher quality products Canada as country of origin

Good international image linked to product quality but more associated with maple syrup than seafood, unlike AK, NO – need to generate awareness

International buyers don’t recognize individual provinces Canada brand can provide umbrella effect for company brands

Canada has extensive coastlines, freshwater lakes and rivers that provide opportunities to increase output

Climate change is changing abundance and distribution of species, threatening existing activity but offering new potential

CommonalitiesThreats

Competition is increasing faster than consumption in our traditional markets and we are losing share

Competitors are focused outwardly on opportunities and better coordinate their effort

We are focused inwardly on problems and our industry is highly fragmented, making cooperation difficult – we need to change the conversation

We have challenges entering new markets

CommonalitiesChallenges

Capture fisheries – changing market requirements, excess capacity, dysfunctional value chains, poor financial returns

Aquaculture – inability to expand production, attacks from ENGOs, inadequate regulatory framework

Neither sector well-positioned to take advantage of opportunities

Government looking to industry for leadership, solutions

Little/no progress in addressing issues, due to conflict among factions

Rationale for A Joint InitiativeSackton: geographic brands are more powerful than corporate

brandsCanada brand can provide an umbrella for corporate brands

Many qualities that can be levered More recognized than provinces Enforcement of regulations a distinguishing feature

In marketing, mass is important; more money = more massWhen there is a problem, all seafood products are affected –

capture, aquaculture, imports, exportsCommon issues, often complex – e.g. seal hunt, disease, trawling

Difficult for individual companies to deal with FCC, CAIA resources are limited Now depend heavily on NFI for crisis management Companies now spending a lot of money on these issues in other ways

Need to find ways to work together on issues – progress here may help with others

What would Canadian Levy System look LikeNorway Model Alaska ModelUsing NSC model of levy

against export value:0.5% levy = $20.5 million0.3% levy = $12.3 million0.75% levy = $30.8 million

Canadian Seafood exports in 2012 = $4.1 billion

Using ASMI model of levy against landed value:0.5% levy = $15 million0.3% levy = $9 million0.75% levy = $22.5

millionCanadian Seafood

Landed Value in 2011 = $3 billion

• Additional leverage from federal & provincial sources• Would have to be government legislated & industry driven• Would be ‘revolutionary’ change for Canadian seafood industry

Notional Mandate for Canadian Seafood Council (CSC)

Collaborative Marketing with emphasis on improved coordination leading to increased efficiency, awareness and demand

Market Intelligence to ensure proactive planning, research & analysis

Communication & Image Management of Canadian seafood

Promoting Sustainable Seafood in Canada Facilitating improvements throughout Seafood Value

Chain to improve market performanceQuality, traceability, sustainability, etc.

Question – Despite all of the challenges identified is there still value in creating an organization focused on the above?

Potential for Value CreationImprove market intelligenceDevelop new markets, nichesDifferentiate Canada as seafood supplierCanada brand helps everyoneUmbrella for company marketingCommon issues companies can’t deal withCrisis managementEconomies of scale through joint effortSustained effort over time

Value Proposition for IndustryFocus on marketing and competitivenessGreater marketing “presence” through increased spending,

sustained effortShow better value from joint spending than company spendingLeverage from government supportConsumers must see value – sustainability, quality, traceabilityDifferentiate Canada as source of high-quality seafood

Reputational risk managementCommon issues companies can’t deal withUmbrella for company brands

Different components to reflect industry diversity – species focus or market focus?

Fairness – who benefits, who pays?Menu of services to choose from?

Where Do We Go From Here?